NY workers' contract to save $230M

ALBANY -- A contract ratified by the second-largest state workers union two weeks ago will save the state $230.1 million over four years, according to a review of state documents.

The Public Employees Federation agreed to a four-year deal on Nov. 3 that included pay freezes and health care givebacks. Some of the savings will recur in the years after the contract is finished, but other costs will increase and some savings are actually deferred payments that the state has to make in the future, officials acknowledged.

When the pact was approved, Gov. Andrew M. Cuomo and labor officials didn't announce the net savings it would produce.

Cuomo and PEF had been negotiating for months and, in fact, had reached a tentative, five-year agreement in July. A Cuomo administration news release pegged the savings in that agreement at "almost $400 million" over five years. It turns out that figure included the savings side of the equation (health care givebacks and furlough days), but not the increased costs (pay raises in the final two years of the contract), according to Division of Budget spokesman Morris Peters.

The actual net savings of that tentative deal was $125.7 million over five years, he said.

With "any new agreement you're going to have costs that you're going to assume and you're going to have savings that you're trying to achieve," Peters said.

PEF is the second largest state workers union in New York, representing 56,000 white-collar employees.

One reason for the difference in savings between the two contracts is that the ratified contract was for four years, rather than five. But if the terms of the ratified contract were extended another year, the net savings would actually decrease to $168.3 million.

Costs go up because eventually the state will pay workers for the nine furlough days in their contract, beginning on March 31, 2015, the final day of the contract.

"They're deferred costs," said Elizabeth Lynam, director of state studies at the Citizens Budget Commission, a fiscal watchdog group. "They're trying to get the cost savings in the financial plan, but it won't help us in the long run."

At a news conference the same day PEF ratified the agreement, Cuomo was asked by a reporter if paying for the furlough days in later years was kicking the problem down the road. Cuomo said: "That's factored into the contract, that's a numerical coefficient that's factored into the contract."

The main recurring savings in the agreement come from health care costs. Union members will be paying more of their health care premium costs, saving the state $45.4 million by the fourth year and $143.6 million over the life of the deal.

With Yancey Roy